Buly A. Cardak

Participation in Higher Education in Australia: Equity and Access

We study the relationship between university participation and socioeconomic status (SES) in Australia, focusing on eligibility to attend university. Participation among those with similar eligibility to attend university does not vary by SES. Conditional on their Equivalent National Tertiary Entrance Rank (ENTER) scores, low SES students are as likely to attend university as high SES students. We find that possession and the quality of ENTER scores (eligibility) rises with SES. Our results suggest better understanding and policy targeting of the link between SES and school achievement, which is an important part of improving equity and access in Australian higher education.

Why are High-Ability Individuals from Poor Backgrounds Under-Represented at University?

We analyse data in which individuals from low socio-economic status (SES) backgrounds have lower university participation rates than those from higher SES backgrounds. Our focus is on the role played by credit constraints in explaining these different participation rates. We propose a multi-stage model of education where university participation is contingent on ability to pay and high school academic performance, which depends on family SES and innate student ability. We find no evidence that credit constraints deter high achieving students from attending university in Australia, a country with an income contingent loan scheme for higher education tuition fees. We do, however, find that how students convert their earlier school performance into the scores on which university entrance is based is contingent on their SES. That is, for students of similar ability, those from higher SES backgrounds are more likely to obtain university entrance scores and achieve higher scores if they do. Hence, policy interventions that rectify the credit constraint problem that faces individuals at the time they make university entrance decisions are not sufficient to equalize university participation across social groups.

Neighbourhood Effects, Preference Heterogeneity and Immigrant Educational Attainment

This paper investigates differences between the educational attainment immigrants and native born individuals in Australia by using Australian Youth Survey (AYS) data combined with aggregate Australian Census data. We decompose differences in educational attainment into: (i) typical demographic and socio-economic sources common to all ethnic groups, (ii) unobserved region of residence and region of origin effects, and (iii) neighbourhood effects such as degree and ethnic concentration of particular ethnic groups in different neighbourhoods. A theoretical model incorporating these effects is proposed but structural estimation is not possible for lack of appropriate data. Instead, a reduced form methodology is proposed and employed. The empirical results identify positive ethnic neighbourhood effects in high school completion and university enrolment for some immigrants to Australia, in particular first and second generation immigrants from Asia. The results indicate that it is not just the size of the ethnic network but the quality of the network that is important.

Education Vouchers, Growth and Income Inequality

This paper uses a growth model with public and private education alternatives to investigate the implications of education voucher for economic growth and the evolution of income inequality. The results indicate that introducing education vouchers can increase economic growth. families that switch from public to private education due to vouchers experience higher incomes, leading to growth in the tax base which in turn raises public education expenditures and increases the growth of the whole economy. Vouchers have an ambiguous effect on income inequality. Gini coefficients indicate increasing inequality while other measures indicate decreased inequality. Comparing income distributions using generalised Lorenz curves, the distribution under a voucher scheme dominates the distribution without voucher. This implies that in the long run, vouchers offer a welfare improvement. In short run welfare comparisons however, more than half the population is worse off with vouchers, which is consistent with the repeated failures if voucher referenda in the US. The results add a new dimension on which vouchers can be evaluated in the continuing policy debate.

Education choice, neoclassical growth, and class structure

The evolution of income distribution is studied in a dynamic model of education choice. In this model, both public and private education are available. Public education is financed using a tax rate determined by majority voting. The analysis focuses on neoclassical growth in order to ensure tractability in identifying a steady state. The steady state income distribution is found to be bimodal. Public education offers higher growth to the poor in the transition to the steady state, however public education students converge to the lower mode of the income distribution. Under some conditions, universal public education offers steads state human capital superior to that available to any student in the mixed education model considered, while universal private education unconditionally offers steady state human capital superior to that of the mixed model.

Why Do Education Vouchers Fail

We examine quantitatively why uniform vouchers have repeatedly suffered electoral defeats against the current system where public and private schools coexist. We argue that the topping-up option available under uniform vouchers is not suficiently valuable for the poorer households to prefer the uniform vouchers to the current mix of public and private education. We then develop a model of publicly funded means-tested education vouchers where the voucher received by each household is a linearly decreasing function of income. Public policy, which is determined by majority voting, consists of two dimensions: the overall funding level (or the tax rate) and the slope of the means testing function. We solve the model when the political decisions are sequential-households vote first on the tax rate and then on the extent of means testing. We establish that a majority voting equilibrium exists. We show that the means-tested voucher regime is majority preferred to the status-quo. These results are robust to alternative preference parameters, income distribution parameters and voter turnout.

Graduates, Dropouts and Slow Finishers: The Effects of Credit Constraints on University Outcomes

The effect of credit constraints on university outcomes is studied. Credit constraints have a negative relationship with dropout, especially on lower achieving high school graduates. Credit constrained students with strong high school achievement are 13–15% more (less) likely to graduate (be slow finishers) relative to otherwise similar students who are potentially or unlikely constrained. Using competing risk analysis, we find dropout is most likely in the first year of study and falls over time for all students. After 3 years of study, the risk of dropout increases for students who are constrained suggesting constraints may eventually bind on these students.

Evidence on Credit Constraints, University Attendance and Income Contingent Loans

The effects of credit constraints on university participation are investigated in a setting where income contingent tuition loans are available to students. Students most likely to face credit constraints have the same or higher probability of attending university as all other students, given their high school achievement. A novel approach to handle potential bias arising from unobserved heterogeneity is proposed. An estimate of unobservable heterogeneity based on post-secondary plans reported during ninth grade is constructed. This estimate is found to explain university attendance but does not overturn results regarding the effects of credit constraints.

Government Subsidies for Private Community Services: The Case of School Education

Governments confront potentially competing demands for increased provision of community services, prudent budgetary management and no expansion in taxes. In the areas of primary and secondary education, the federal government has attempted to deal with these pressures by using government subsidies for private schools to expand the size of the private school system and free up more resources for those who remain in the public education system. This initiative will be most successful when the demand for private education is highly responsive to private school fees and the subsidies are targeted at those segments of the school and student population that are most responsive to reductions in private school fees. The current system based on the overall Socio- Economic Status of each schools student population is probably an improvement over previous schemes, but it is still potentially inefficient because it does not target funds at the most fee-responsive groups.

Participation in Higher Education: Equity and Access: Are Equity-based Scholarships an Answer?

We re-analyse data used by Le and Miller (2005), where it is found that students from low socio-economic status (SES) backgrounds have lower university participation rates than those from higher SES backgrounds. We utilise the concept of eligibility to attend university - here defined by both possession of a valid ENTER score and the value of that score. We find participation among those with similar eligibility to attend university does not vary by SES. Conditional on their ENTER scores, students from poor family backgrounds are as likely to attend university as those from better- resourced families. Hence, we see little scope for equity based tuition scholarships to rectify differences in participation between these groups. Instead, we find that possession and the quality of ENTER scores (eligibility) does rise with SES. Further analysis and policy targeting of the linkage between SES and ENTER scores is more likely to produce superior equity and access outcomes in higher education.